Sars A-team tackles state capture

Taxing work: The Nugent commission found that Sars ‘reeked of intrigue, fear, distrust and suspicion’. (Delwyn Verasamy/M&G)

Taxing work: The Nugent commission found that Sars ‘reeked of intrigue, fear, distrust and suspicion’. (Delwyn Verasamy/M&G)

The South African Revenue Service (Sars) has set up a crack team in the office of commissioner Edward Kieswetter to tackle any cases that emerge from the Zondo inquiry into state capture and the Nugent inquiry into Sars. This team is watching for opportunities to claw back the tens of billions of rand that have been looted from the state.

Two months after taking office, Kieswetter is moving apace in an attempt to reverse the destruction of the tax agency under Tom Moyane’s rule — but he is also targeting the broader state capture project, which hit state-owned enterprises and the fiscus hard.

It was a baptism of fire for the Sars doyen. He re-entered the organisation he once helped shape into a world-class revenue collector at the beginning of May.
Over the past five years, Sars has degenerated into an organisation that, according to retired Judge Robert Nugent, “reeked of intrigue, fear, distrust and suspicion”.

To add to its woes, the contraction in the economy could culminate in Sars again missing its revenue targets. But Kieswetter said the revival of key sections such as compliance, the large business centre and the illicit economy units would begin to turn things around.

The taxman’s scrutiny of state-capture allegations is welcome news for South Africans, who are confronted daily with whistle-blowers’ hair-raising reports of the extent to which the state was captured and taxpayers’ money abused. No individuals involved have yet been held to account.

Kieswetter said in an interview this week that he has set up dedicated capacity in his office to respond when matters are raised before the Zondo commission, as well as tackle allegations made before Nugent. The team is headed by former Sars acting commissioner Mark Kingon.

This move comes on the back of reports that Gavin Watson, who heads dodgy services provider Bosasa, now called African Global Operations, was grilled by a “confidential” Sars inquiry about his tax affairs. Attention was initially drawn to Bosasa at the Zondo inquiry.

“Now remember,” Kieswetter said, “we are motivated for tax consequences but invariably behind the tax issues sits a criminal intent, so that is why we are working very closely with the prosecuting authority and the investigating authority so that we don’t miss the opportunity to collaborate.”

Doing so would “make sure that those people who have been actively involved in the capture of the state are brought to book”.

Sars is by no means out of the woods after former commissioner Moyane’s ruinous reign, but Kieswetter said the tax agency was on a slow road to recovery.

The far-reaching redesign of the Sars operating model, which was conducted in cahoots with Boston-based consultancy Bain & Company, was central to the damage inflicted during the Moyane years. The restructuring displaced more than 200 Sars senior managers and sidelined critical and experienced employees.

Kieswetter has to tread carefully: simply repeating what Moyane had done, which was, in Bain’s words, to “neutralise” those who were hostile to his ill-intentioned project, would be a mistake.

Sars commissioner Edward Kieswetter will implement all of the Nugent commission of inquiry’s recommendations (Freddy Mavunda/Business Day)

“I have to work within the law, I have to apply my mind, I have to be fair and transparent. The way you bring about the change becomes the change. So, if you come in here like a bull in a china shop, you also inadvertently create the wrong culture,” Kieswetter said.

He is not working with the Moyane-aligned executive committee he found when he arrived at Sars, describing it as on “pause” rather than being completely disbanded. The committee took critical decisions, together with the previous commissioner, about the running of the tax agency.

Kieswetter said: “I also have to be careful that I don’t appear to be Moyane in a different guise and treat people the way that he treated them.”

Among the first decisions Moyane took at Sars was to disband its executive committee, the Nugent inquiry heard. But Kieswetter said he continues to tap into the experience of these individuals.

The Nugent report — the culmination of the inquiry into Sars — identified a few individuals on the executive committee who played an insidious role under Moyane.

Again, Kieswetter said he is not targeting anyone but has had conversations with those identified in the report and is taking legal advice on how he should proceed.

His said his starting point is that he accepts the bona fides of the Nugent report and will implement its recommendations. He added that he is working with Nugent and his team in his bid to turn Sars around.

Much of this work will concern the 14 000 or so people who work at Sars. A large, framed picture in the reception area of Kieswetter’s office shows thumbnail photos of smiling Sars employees. They appear happy, laughing and clinging to each other. This is despite the picture being mounted during Moyane’s tenure, when staff morale collapsed.

Insiders this week said that they have faith in Kieswetter, but that there are still severe human resource issues that need to be addressed, most of them caused by the fact that those pushing Moyane’s agenda remain in critical positions in Sars.

Kieswetter said the Bain remodelling had inflicted significant damage and he is addressing this, but it will be a slow process.

Sars and the treasury are working together to lodge a civil claim against Bain and to bring criminal charges against the company, as recommended by Nugent.

Kieswetter said that Bain still has a case to answer, even though it had returned what it had earned, with interest, from its contract with Sars, which was irregularly awarded. He said that paying back the money was not enough to reverse the damage caused by Bain’s operating model.

Bain said said it agreed that paying back the fees was not enough but has taken a range of internal measures to prevent the same mistakes in the future. It would also “have the appropriate discussions” if it is asked to help with “further inquiries”.

In the meantime, those sidelined in the Bain overhaul have received meaningful work, although Kieswetter has yet to iron out the operating model and reporting lines.

Doing that requires Kieswetter to work 20-hour days. He said his decision to return to Sars was illogical, given the enormity of the task, but that it was a call to his “soul”. .

The Sars story is not over, with dodgy politicians still training their arrows at it. This time around, Sars is prepared and has the support of the treasury and the president.

“I have work to do. I will remain focused on rebuilding Sars. I can’t afford to be distracted,” Kieswetter said.

An earlier version of this article said 1 400 people work at Sars. This was an error and which has been amended to a 14 000-strong workforce. 

Natasha Marrian

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